The Servicemembers Civil Relief Act

Everyone in the rental industry should know that military personnel have special legal protections under the Servicemembers Civil Relief Act or SCRA for short.  SCRA’s purpose is to provide for, strengthen, and expedite the national defense by enabling persons serving in the military service to devote their entire energy to the defense needs of the United States.  The law accomplishes this by providing for the temporary suspension of judicial proceedings that may adversely affect the civil rights of servicemembers (SM or SMs) during their military service, and by allowing SMs to terminate certain contractual obligations.

SCRA only applies to SMs who are serving.  A “SM” is a member of the uniformed services.  Uniformed services means “armed forces” (army, navy, air force, marines), but also includes the commissioned corps of the National Oceanic and Atmospheric Administration, and the commissioned corps of the Public Health Service.  The law does not apply to non-active duty or retired SMs.  The SM must be “in the military service” of the United States for the law to apply.  For traditional armed forces such as army, navy, air force, and marines, this means the SM must be on active duty.  Active duty includes full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned.  Active duty does not include full-time National Guard duty under normal circumstances.

However, a National Guard member shall be “in the military service” of the United States for purposes of the law if such the member is serving under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days for purposes of responding to a national emergency declared by the President and supported by federal funds.

A landlord cannot evict a SM tenant without a court order.  If a landlord violates this law, the landlord has committed a crime.  Violation of the law is a misdemeanor punishable by up to one year in jail.

If a landlord files an eviction against a SM, the court may appoint an attorney for the SM.  The court, an appointed attorney, or the SM may request a stay of the eviction.  The court may stay an eviction proceeding against a SM for 90 days if it finds that the SM’s ability to pay the rent is materially affected by his military service.  A stay means any eviction is on hold until further order of the court.  If a court stays any eviction against a SM, the rent continues to accrue during any stay, and ultimately the SM is liable to the landlord for the payment this rent.

The court may condition a stay upon any terms that are required by justice and equity.  The court has wide discretion to “balance the equities” between the landlord and the SM, and to order appropriate relief.  For example, if the rent has not been paid and there are severe non-compliance issues, the court could deny the stay and allow the eviction to continue.  Similarly, if the amount of unpaid rent was significant (say 3 months for example), the court could presumably order a shorter stay.

SMs may terminate leases under certain circumstances.  If not in military service at lease execution, a tenant may terminate a lease upon becoming an active duty service member (e.g. joining the army).  If a SM at the time of lease execution, a SM may terminate a lease upon receiving orders for a permanent change of station (“PCS” orders), or upon receiving orders to deploy for a period of not less than 90 days.

Because SCRA does not define “permanent change of station”, the term PCS has become subject to dispute.  Many leases use the 50-mile test.  If the SM moves less than 50 miles, the SM’s move is not a PCS, and therefore the SM is not entitled to terminate the lease.  The 50-mile test is not in the SCRA statute.  The test was adopted from the IRS code.  The IRS code allows SMs to deduct moving expenses if the SM moved more then 50 miles.  However, cases interpreting the tax code have held that a SM “permanently changes station” when the SM moves from one permanent post of duty to another permanent post of duty at a different duty station regardless of distance.

To terminate a lease, the SM must deliver written notice of termination along with a copy of the PCS or deployment orders.  Thus, a landlord’s lease may require that a SM provide a copy of applicable orders.  A landlord may also verify the authenticity of the orders.  Since we have seen more and more cases of fake orders, we recommend that all orders be verified.  A landlord may verify a SM’s orders by contacting the base or commander that issued the orders.

The SM may deliver the written termination notice and orders in person, by business courier, or by U.S. First Class Mail Return Receipt Requested.  Notice is given the date mailed or delivered.  The SM’s termination is effective on the last day of the month after the month in which the SM gave notice.  For example, if the SM gives notice of termination on July 20, the effective date of termination is August 31.  Termination of month-to-month terms is 30 days after the first date on which the next rental payment is due.  For example, if the notice were mailed April 15, then the next rent payment would be due on May 1.  The termination date is then 30 days from May 1, or May 31.  The SM is always liable to pay rent through the effective termination date.  If the effective termination date does not end exactly on the last day of the month, rent for any odd amount of days is pro-rated on a daily basis.

An SM’s valid termination also terminates a dependent’s liability on the lease.  Usually, a dependent is a spouse, but can be other individuals.  Under SCRA, a dependent means spouse, child, or an individual for whom the SM provided more than one-half of the individual’s support for 180 days immediately preceding the termination.  If a dependent individual signed the lease, but the SM did not, then neither the dependent nor the SM can terminate the lease under SCRA.  For example, if the wife of a SM signs the lease, but the SM does not, the lease cannot be terminated under SCRA.

If a SM exercises their right to terminate a lease, can the landlord charge lease break fees or charge back concessions?  No.  The clear intent of SCRA is to cut off a SM’s liability for rent on the termination date without penalty or consequence.  Absent a waiver, charging a lease break fee or charging back concessions clearly penalizes the SM for exercising their rights under the law.  Similarly, can a landlord apply the SM’s security deposit for unpaid rent and physical damages to the unit?  Yes, a landlord may apply a SM’s security deposit, subject to qualification, to unpaid rent.

When applying a deposit, the landlord must qualify amounts owed.  A landlord can apply a security deposit to any amounts that accrued prior to the effective date of termination, and for physical damages to the unit.  A landlord may not apply the security deposit to any rent that did not accrue prior to the effective date of termination.  A landlord may not interfere with a SM’s right to remove his property from the premises, or withhold his security deposit to satisfy rent, or other obligations accruing under the lease after the effective termination date.  These rights extend to the SM’s dependents.  If a landlord wrongfully seizes a SM’s property including the SM’s security deposit to satisfy unpaid rent or other obligations in violation of the Act, the landlord subjects himself to fines and potential imprisonment.  Based on this specific provision, and the clear intent of the law, applying a SM’s security deposit for lease break fees is a risky proposition.

Many leases attempt to contract around a SM’s SCRA rights.  Lease clauses that waive or alter SCRA rights are unenforceable because they do not comply with SCRA provisions.  These Lease provisions fail primarily for two reasons.  First, only a SM who is already in the military can waive rights under SCRA.  Thus, it is impossible for a tenant who is not in the military but subsequently enlists to waive SCRA rights.  Any lease clauses that waives SCRA rights are also unenforceable because any waiver of a SM’s rights under SCRA must be contained in a conspicuous waiver agreement.  Conspicuous means in a separate agreement, which is apart from the SM’s lease, and in at least 12-point font.

Landlords should consider having SM’s sign a complying SCRA waiver for many reasons.  Pocket orders are a primary reason.  A SM has pocket orders when an SM signs a lease, and already has PCS or deployment orders, but fail to disclose them to the landlord (the SM keeps them in his pocket).  Similarly, an SM could know that they are retiring or being discharged during the lease term.  Absent PCS orders, retirement and discharge issues under SCRA are muddy.  Some lease clauses state that the SM affirmatively represents that they don’t have pocket orders, don’t plan to retire, or won’t be discharged during the lease term, and if these representations are false, then the SM owes liquidated damages or future rent.  On the one hand, an SM with pocket orders who signs a lease with such a clause has committed misrepresentation.  On the other hand, these clauses run squarely against SCRA’s requirements for waivers to be contained in a separate written document.  Because no landlord should voluntarily enlist to be the test case, a separate waiver should address these issues.

A SCRA waiver could and should also address the non-appearance issue.  SCRA was primarily designed to protect deployed military personnel from default judgments.  Under SCRA, a non-appearing SM cannot be defaulted in a civil action, until certain procedural requirements have been met.  One of these procedural requirements is that no default judgment can enter until the court appoints an attorney to represent the non-appearing SM.  A SM not appearing because the SM is in a firefight in Afghanistan is one thing.  An SM not appearing when the SM is stationed at base five miles from the courthouse is another.  Some SMs who are not deployed overseas or on active training exercises know their non-appearance rights and use these rights to delay and otherwise prevent the enforcement of a landlord’s rights.  For example, a SM who owes money to a landlord can make it nearly impossible to collect by simply not showing up at court.  A SCRA waiver should require non-deployed SM to waive non-appearance rights.  A SCRA waiver could also address the 50-mile issue.

If a service member takes advantage of any SCRA’s rights, a landlord may not use this against the SM.  For example, if a SM rightfully terminates a lease under the act, the landlord may not report this to any credit reporting agency or credit bureau as an adverse or negative event.  Finally, a landlord may not deny a SM’s rental application to rent based upon credit worthiness if the SM has exercised any right under the SCRA in the past.

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